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LA City Council committee backs new construction fee to aid affordable housing

Wednesday, Aug 23, 2017

A key Los Angeles City Council committee Tuesday backed a plan for a new fee on the construction of single-family homes, offices, apartments and other developments, with the funds going to pay for affordable housing. The linkage fee backed by the Planning and Land Use Management Committee would range from $1 to $15 a square foot, depending on the type of project and neighborhood.

The committee voted 5 to 0 to support the fee, which supporters say will help raise millions of dollars. L.A. faces a crippling housing shortage and homelessness crisis, putting pressure on lawmakers to find solutions.“We’re out of choices,” Councilman Marqueece Harris-Dawson said at Tuesday’s hearing. “It’s a disastrous choice to do nothing.” The fee applies to new construction and varies by real estate market. For instance, home builders on the Westside — considered a high market — would pay higher fees, while developers in San Pedro would have lower fees. The three market areas for commercial development have fees ranging from $3 to $5 a square foot, while the four residential development area have fees ranging from $8 to $15. Developers of smaller, multiunit residential buildings would face a $1-a-square-foot charge in lower markets.

The market areas are defined within the city’s Community Plan Areas, boundaries that help guide development. Council members made several amendments to the ordinance during Tuesday’s hearing, including a longer phase-in period. The full fee will not go into effect until a year after the council passes the ordinance.

Councilman Curren Price also sought a three-year exemption to the fee for commercial and industrial projects in a poverty-stricken area of his South L.A. district.

Hundreds of people packed into a downtown hearing, with both supporters and opponents jeering and clapping during the meeting.

Doug Smith, an attorney at pro bono law firm Public Counsel urged passage of the fee, telling the panel, “Our crisis requires it.”

Officials say the fee is an attempt to help ease the strain on the rental market for lower-income people brought about by the construction of market-rate housing and other development. Mayor Eric Garcetti introduced the proposal several years ago, and his appointees on the city Planning Commission this year backed a citywide fee of $12 a square foot for residential development and $5 a square foot for commercial development.

Amid council members’ concerns about a “flat” citywide linkage fee and its effects on Los Angeles’ poorer areas, new options for a geographic-based fee were introduced in a city report. The report, released last week, also suggested the linkage fees wouldn’t be passed on to renters and buyers. Instead, “costs associated with housing impact fees are either absorbed into land prices or reductions in developer profits, or some combination of the two,” the report found. Some developers dispute that assertion and argue housing costs will rise if the council passes the fee.

Following Tuesday’s vote, the draft ordinance will return to the planning committee before going to the City Council. The proposal may also be heard before the city’s Housing Committee, officials said. In a statement after the vote, Garcetti called the linkage fee “a critical piece of our comprehensive strategy to combat the housing crisis.”